James Pethokoukis

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– The unemployment rate is now 9.1 percent, up from 8.8 percent two months ago. That’s important. Although research shows the U rate is more reliable than the payroll employment numbers over the long term, it might still suffer from a one month blip due to turnover in the survey sample. But a second increase in two months all but nails the coffin shut. By that I mean that the U.S. is experiencing if not a double recession then a historically stagnant recovery.

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The problem with the Federal Reserve is not that an “activist Keynesian” — in the words of the Club for Growth — like Peter Diamond can be appointed to such a powerful economic policymaking body. His views are, unfortunately, well within the mainstream of economic policymaking. The problem is that Diamond and the other Fed members really don’t matter. As one former Fed member said to me, “If you see someone from the Fed talking on TV and he’s doesn’t have a beard, feel free to ignore him.”

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I don’t think the terrible May jobs report means the Obama presidency is doomed anymore than I thought the killing of OBL meant re-election was in the bag. But another 18 months of economic muddling through – high unemployment, stagnant wages, dead housing, slow GDP growth – would certainly make the GOP nomination one worth winning. Like REALLY worth winning – let’s put it that way. And the history of economies after bank crises show the “muddling though” scenario is a common one.